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Tallahassee, FL (CompNewsNetwork) - Florida Insurance Commissioner Kevin McCarty today announced that he has issued a final order approving a 6.4 percent increase in workers' compensation insurance rates, based on an amended filing by the National Council on Compensation Insurance (NCCI). The approved increase applies to new and renewal business and will become effective April 1.
On Jan. 26, Commissioner McCarty issued an order denying the NCCI's Nov. 14 rate filing in which it was seeking an 8.9 percent rate increase as a result of the impact on rates it projects following the Oct. 23 Florida Supreme Court opinion in the case of Emma Murray v. Mariner Health Inc.
"Although it is still somewhat early to know for sure what the full impact of the Supreme Court's decision on workers' compensation rates will be, I felt it was necessary to approve this modest increase," said Commissioner McCarty. "I hope that the legal and business communities will be able to come to an agreement on a plan for legislation that will maintain appropriate access to the legal system for injured workers while also still keeping workers' compensation rates affordable for employers."
The Court's decision eliminates the statutory caps on attorney fees that were imposed as a result of the 2003 reforms under SB 50A and will enable claimant attorneys handling workers' compensation claims to collect increased fees for their services.
Prior to the legislative reforms, Florida consistently ranked No. 1 or No. 2 in the country for the highest workers' compensation rates; however, post-reform Florida has dropped out of the top 10 rankings.
The approved rate increase will add about $172 million in insurance costs for Florida employers. But, in combination with the 18.6 percent rate decrease that took effect Jan. 1, the net savings to Florida employers is still $438 million.
In its Nov. 14 filing, the NCCI had proposed spreading an 18.6 percent rate increase over two years – 8.9 percent for the first year, to become effective March 1 – for the voluntary market for all new and renewal workers' compensation insurance policies written in Florida. In disapproving the filing, Commissioner McCarty cited disagreements with the data and methodology the NCCI used to calculate the projected effect of the Court's ruling.
In October, Commissioner McCarty approved an 18.6 percent reduction in rates, effective Jan. 1. It was the sixth consecutive drop in worker's compensation rates since the Florida Legislature passed the reforms in 2003; and with the change, the cumulative overall statewide average rate decrease since 2003 is more than 60 percent. The NCCI originally had requested a 14.1 percent decrease in its filing of Aug. 27. The further reduction in rates had the potential to save Florida employers more than $610 million.
The 18.6 percent decrease in October stands as the largest one-year decrease on record, following the two previous largest decreases – 18.4 percent for 2008 and 15.7 percent for 2007. The last six filings represent the largest consecutive cumulative decrease on record in Florida workers' compensation rates – dating back to 1965.
The workers' compensation reform law instituted provisions for enhanced fraud compliance and revised permanent and temporary disability definitions. It also set new parameters for attorney and physician compensation and improved dispute resolution procedures, in addition to making many other improvements to the system.
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